Manufacturers took another small step towards recovery last month after a report showed a slight improvement in orders.

Manufacturers took another small step towards recovery last month after a report showed a slight improvement in orders.

The CBI's latest industrial trends survey found that order levels were at their highest since February of last year.

But the CBI said it was clear that manufacturers were not out of the woods yet.

In the survey, 18 per cent of firms reported that orders were above normal, while 35 per cent said they were below par. The resulting balance of minus 17 per cent compares with the minus 26 per cent reported in May and minus 28 per cent in April.

Export orders showed only modest improvement as the balance of minus 27 per was a marginal improvement on the minus 28 per cent seen in May.

The survey also suggested that firms had met the recent pick-up in orders by reducing existing stocks.

That meant output levels only edged slightly higher in the last month, with a balance of plus six per cent of firms expecting output to improve.

The CBI's chief economic adviser, Ian McCafferty, said: "Manufacturers are cautious about the recovery with output expectations still low but it is encouraging that orders are picking up."

Just nine per cent of businesses expected prices to go up in the next four months.

That compared with 19 per cent which thought they would go down further.

Mr McCafferty said: "There is little let-up in the downward pressure on prices, and this coupled with evidence of more modest pay awards means pressures remain well under control."